Facing challenge of airline demand outpacing airport capacity | Fin24
  • Illicit Tobacco Trade

    The SA Revenue Service says it is going to court to recover R200m in taxes in a decade-old case

  • SAA Strike

    The airline says it will take legal action over 'malicious' claims of unsafe flights by unions.

  • New CEO

    After months of speculation and delays, Andre de Ruyter has been named Eskom's new head.


Facing challenge of airline demand outpacing airport capacity

Mar 05 2018 17:00
Carin Smith

Cape Town - Airport capacity and airline demand for access to airports cannot keep pace with each other, according to Lara Maughan, head of worldwide airport slots at the International Air Transport Association (Iata).

She pointed out that the number of passengers are due to nearly double over the next 20 years to about 7.2 billion per year. Airbus and Boeing also forecast that the number of aircraft in operation will likely double over the next 20 years as well.

At the same time, airport capacity is not keeping up.

"There is no doubt that we are entering a period where capacity availability is going to impact the ability to serve the demand that is forecast," Maughan said in a report.

"The significant gap between capacity available and what is required results in excess demand, which needs to be managed. Without a process for allocating the capacity available, we will see chaos due to more aircraft being available than stands and more passengers than a terminal and its systems can cope with."

In her view, the passengers and businesses relying on freight are impacted most in this scenario.

"Given the continuing growth in passenger demand as well as cargo forecasts, and the comparatively conservative airport development projects we foresee, slot coordination will continue its role in the aviation industry," she said.

"Realistically, there could be another 100 airports declared full in the next ten years. We could even see up to 300 slot-coordinated airports in ten years' time."

In her view, the situation reduces flexibility and hampers the ability to meet passenger demand without serious constraints and non-optimal flight schedules to fit in with available capacity.

"Unfortunately, it also means actual passenger demand will be incredibly hard to serve when there is less than optimal access to the market," she explained.

"A system or process is needed to allocate what is available in a balanced and controlled manner in order to prevent huge congestion developing by only allowing those carriers with slots to operate."

She pointed out that many stakeholders have different views and interests. That is why the system used would have to provide broad benefits to as many stakeholders as possible.

Some of the options stakeholders have proposed in the past include peak/off-peak pricing; administrative allocation of slots through a defined process - "slot coordination"; and a pure market approach of "slot auctions".

Regarding peak/off-peak pricing, Maughan said it does not solve the problem as there still needs to be a mechanism to actually distribute the capacity available. As for slot auctions, she feels this approach would be "disastrous".

"Many restrictions and rules need to be included in the auction to make it feasible. It would certainly not resemble a 'free market' solution in practice," she said.

As for the administrative allocation option through slot coordination, in her view, this is currently the preferred model, which usually follows the Worldwide Slot Guideline (WSG).

"It is not perfect, but is altogether a better option than the others on the table," said Maughan.

The pointed out that the International Civil Aviation Organisation (Icao) has previously stated that any slot allocation system should be fair, non-discriminatory, transparent, and take into account the interests of all stakeholders while also being globally compatible. It should maximise the effective use of airport capacity in a simple, practical and economically sustainable way.

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER

iata  |  aviation  |  airlines


Company Snapshot

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

What do you think about private healthcare in SA?

Previous results · Suggest a vote